Contribution of open source to Europe's economy: 450 billion per year

The European economy is saving around 114 billion euro per year by using open source software solutions. Apart from direct costs savings, other benefits of open source result in reduced project failure and lower costs for code maintenance. Reinvestment of these savings leads to an increase in productivity and efficiency worth at least 342 billion euro a year, according to estimates published by open source researcher Carlo Daffara. "Decidedly not a marginal contribution to the European economy."

Daffara is a researcher in the field of IT economics. He focusses on collaborative development models. In the past fifteen years he was also involved in European Commission research projects involving open source.

To assess the value of the use of open source, Daffara combines data from code reuse surveys with macroeconomic esimates. Quoting several sources, he estimates that about 35 per cent of the software used in the past five years is directly or indirectly derived from open source. To translate this into savings, the researcher draws on estimates for the total value of the IT sector. Industry groups and analysts estimate this to be between 374 billion and 399 billion euro.

To this Daffara adds estimates on costs saved because using open source generally has a positive impacts on projects success rates. He also points to research showing that "code that is reused is substantially better in terms of quality". Such software also improves faster and its maintenance efforts are substantially lower, he writes. Based on earlier research models, the costs for reused code is about three-fifths that of traditional code.

"Especially important is the effect of the reinvestments of these savings into IT itself", the researcher continues. Companies that use a lot of open source are more productive and efficient, he finds. The researcher suspects that there is a correlation between the use of open source software and the ability to attract customers of a relatively larger scale. The result is a long term increase in productivity and efficiency, of at least 342 billion euro per year.

Daffara's estimates of the contribution of open source software to the European economy were published by the OpenForum Acadamy, a think-tank. His paper is part of the proceedings of the first OFA conference, which took place in Brussels on 24 September. The book can be downloaded for free.